The Bill itself is part of legislation that would amend telecommunications interception legislation, making it easier for law enforcement to wiretap new technology as it emerges. While business leaders condemned the proposal for imposing potentially "onerous requirements" on the Australian telco industry, the top civil servant hit back, describing their attitude as quite simply "wrong, wrong, wrong".

The controversial Schedule 2 requires telecommunications providers to notify the government of any network change to the system that is likely to have a "material adverse effect" on the ability of the organisation to comply with its other obligations under the bill or existing legislation.

According to Australian Mobile Telecommunications Association (AMTA), chief executive, Chris Althaus, this proposal was of major concern and should be scrapped. He told the Committee: “It is a schedule which is providing what we regard as onerous requirements on industry, and that has the potential to limit partnerships and outsourcing by Australian companies.

"It creates a non-technology-neutral situation with uneven requirements in Australia versus other places in the world. It certainly will create uncertainty and high levels of risk. It certainly will delay and potentially limit the rollout of innovation and innovative products and constrain our members and the industry’s ability to assemble competitive packages."

Mr Althaus was seconded by Telstra manager, future networks and services, regulatory operations, Michael Ryan, who warned that the proposal could place an additional burden on telecommunications companies looking to provide cloud services.

He said: "Providers [of Cloud services] in Australia can be telecommunications related companies or they can be independent software related companies, so we end up with some real discrepancies with what is proposed in Schedule 2 in that if a telecommunications company wants to package up some Cloud computing with some telecommunications services it is providing it appears to get caught up in Schedule 2 but a purely software house apparently wouldn’t.

"Likewise these services can be supplied directly from overseas, but if we want to be involved and make it easier for our customers by putting together a total package of services then we seem to get caught up with additional notification required by this process."